By Virginia Harrison, MarketWatch
SYDNEY (MarketWatch) — Crude oil futures sunk below $92 a barrel in electronic trading on Monday, with a stronger dollar dampening its investment appeal.
Oil for July delivery CL1N -1.45% lost $1.42, or 1.5%, to $91.59 a barrel on the New York Mercantile Exchange during Asian trading hours.
The lackluster session followed losses of more than 6.2% for crude last week, as concerns about Greece’s fiscal crisis, global growth and demand for energy weighed on oil prices.
A new financing strategy for Greece will be defined by early July, the Eurogroup said late Sunday, as negotiations between the Greek government and the European Commission continued toward solving the embattled nation’s sovereign-debt issues. Read more about Greece.
Oil analysts at National Australia Bank (NAB) said, despite some recent softness in global macro-economic data, they “do not expect a near-term recession in any of the large developed or emerging economies.”
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“Looking forward, stronger growth in private-sector demand is expected to further tighten the balance in the oil market, gradually pushing prices higher,” the analysts said.
On that basis, NAB retained its Nymex oil-price forecasts of $94 a barrel in the second-quarter, rising to $113 in the third-quarter of 2011.
“The risk premium currently factored into oil prices is expected to persist through 2011, with an orderly near-term resolution of the conflict in Libya difficult to envisage,” the analysts said.
NAB also said that the failure of Saudi Arabia to raise production levels, as anticipated in the market, would create an upside rise to oil prices.
The dollar rose in Asian trading hours on Monday, which tends to discourage buying in dollar-priced commodities including oil.
The dollar index DXY +0.46% , which compares the U.S. unit to a basket of six other major currencies, rose to 75.341 from 75.005 late Friday.
Virginia Harrison is a MarketWatch reporter based in Sydney.
